January 8, 2024
Finalized New York State corporate franchise tax regulations will affect many industries
On December 27, 2023, the New York State (NYS) Department of Taxation and Finance (Department) finalized its Article 9-A corporate franchise tax regulations after a public comment and review period. These regulations implement tax reform measures originally enacted in 2014 and reflect a drafting process that spanned several years with many different drafts/variations. At a high-level, the reform measures merged the corporate franchise and bank taxes, adopted market sourcing, new definitions of business and investment capital and income, new income tax base exemptions, unitary combined reporting, and a new regime for post-apportionment net operating loss (NOL) carryforwards, among other things.
As discussed in Breaking Tax News bulletin 2023-9014, the final regulations generally follow the proposed regulations that the Department submitted under the State's Administrative Procedures Act (SAPA) process on August 9, 2023. Taxpayers will need to consider many provisions when filing returns, preparing financial statements, handling audits, and engaging in mergers and acquisitions.
This Alert provides a high-level discussion of key provisions that taxpayers need to review for tax compliance, audit and planning matters. Each taxpayer will undoubtedly encounter specific provisions that uniquely impact their circumstances and may not be covered here. Our NYS tax practitioners are available to discuss any aspect of these regulations whether we have summarized them or not.
Part 1 — Imposition of tax
The final regulations provide various rules for determining when foreign corporations are subject to tax under the state's economic nexus threshold for deriving receipts from New York and guidance for determining when Public Law 86-2721 applies to corporations conducting business via the internet.2 In particular, they generally provide that a corporation may develop nexus by engaging in activities over the internet that would exceed the solicitation of orders of tangible personal property (See Tax Alert 2022-0734).
Industry groups objected to the internet-based provisions, contending that corporations should typically be physically present before the protections of Public Law 86-272 are overridden. The Department rejected those comments, saying it views the final regulations as "a rational interpretation of law … [and] consistent with positions taken by the Multistate Tax Commission and several other states … ."3 Taxpayers need to carefully review these provisions now that the regulations are final for purposes of compliance and audits.
The final regulations maintain prior regulatory provisions, which imposed nexus on foreign corporations that are (1) limited partners in a partnership that is doing business, employing capital, owning or leasing property, maintaining an office, or deriving receipts from activity in NYS; and (2) engaged, directly or indirectly, in the participation in, or the domination or control of, all or a portion of the partnership's business activities.4 For purposes of the second requirement, a foreign corporation is engaged in such activity if it has a 1% or more interest as a limited partner in the partnership and/or the basis of its interest in the limited partnership is more than $1 million.5
In prior drafts of the regulations, the Department had increased these thresholds to 5% and $5 million, but the final regulations maintain the historic thresholds of 1% and $1 million. The final regulations also extend these nexus thresholds to members of limited liability companies (LLCs) that have rights to management and control that are equivalent to that of a limited partner.
The statutory standard for deriving receipts from NYS does not include any exclusions for receipts that the tax law sources to NYS on a mandatory basis, including receipts derived from financial transactions that occur through a registered securities broker or dealer or licensed exchange (in those circumstances, 8% must be sourced to NYS for apportionment and thus nexus purposes). However, the final regulations include exceptions for interest from federal funds, interest from deposits at a federal reserve bank, and interest and net gains from government agency debt, such that those receipts will not be included in the nexus determination. Practitioners urged the Department to consider excluding all receipts that receive mandatory 8% sourcing, but the Department rejected those comments.
The final regulations define "New York S Corporation" as a federal S Corporation that either elects to be a New York S Corporation under NY Tax Law Section 660(a) or is deemed a New York S Corporation based on the amount of its investment income, which for this purpose includes interest, dividends, royalties, annuities, rents and gains derived from dealings in property, including the corporation's share of such items from a partnership, estate or trust.6 This definition is consistent with the recent Lepage decision.7 Taxpayers should review the Lepage decision and this final regulatory provision for purposes of compliance and audits.
Part 3 — Computation of tax
For corporate partners that own a beneficial interest in non-unitary corporate equity investments through a partnership, the equity investments may only qualify as investment capital if the partnership satisfies the ownership criteria8 and identifies them as held for investment in the same manner as required by Internal Revenue Code (IRC) Section 1236(a)(1).9 Industry groups previously commented that such identification should occur at the corporate partner level because investment capital treatment is only relevant for corporations, and corporate partners may lack visibility and authority to cause or influence those partnerships in which they have interests to identify the underlying investments as investment capital. The Department, however, commented in its Assessment of Public Comment document that "this alternative [is] inconsistent with the aggregate theory of partnership taxation employed in New York, which generally treats the corporate partner as doing what the partnership is doing. Thus, the partnership, as the owner of record of the stock, is the appropriate entity to make the required identification."
Another area of uncertainty is determining what constitutes "constitutionally protected investment capital,"10 which is treated as tax exempt under the tax law. The final regulations provide various examples of assets and income that may fit this exemption11 and highlight that the investments must not be part of the taxpayer's unitary business and must not serve an operational function in the taxpayer's business.12 We have seen substantial controversy surrounding whether an intangible asset is a "debt obligation or other security [that] cannot be apportioned to the state"13 and, therefore, tax exempt.
For purposes of computing a taxpayer's PNOLC subtraction pool, the final regulations require that taxpayers ignore federal audit changes that were finalized after the expiration of the statute of limitations for the report on which a PNOLC subtraction was first claimed.14 This specifically includes the unabsorbed NOL and the base-year tax rate or business allocation percentage. Even though the Department and taxpayers are bound by the positions taken on returns in closed tax years, the Department and taxpayers could correct errors made in the calculation of the unabsorbed NOL15 and prior-period PNOLC subtractions for purposes of the PNOLC subtraction carryforward and pool for open tax years.16
While we have not yet seen substantial audit activity or compliance issues around these provisions, we have seen audit activity around whether IRC Section 382 applies to a target company's PNOLC subtraction allotment and carryforward that an acquiring corporation or combined group would otherwise utilize in computing their tax.
The final regulations require investments in the FRB and FHLB to be deemed business capital that generates business income.17 Industry groups commented that such investments should be eligible for investment capital treatment if the requirements of NY Tax Law Section 208.5(a) are met. The Department rejected this position, arguing "its legal analysis has concluded the FHLB and FRB investments would not meet the statutory definition of investment capital."18 Given this position, taxpayers need to consider how to apportion the income from the FRB and FHLB. See the later discussion on the apportionment of interest income from the FRB and FHLB.
The tax law requires an addition modification (i.e., addback to income) for royalties paid to a related member that is not included in a combined report with the taxpayer, unless certain exceptions apply.19 The criteria for those exceptions generally hinge on the taxability of those payments to the related member, or the flow-through to an unrelated party, and the business purpose of the arrangement. The final regulations provide additional requirements for meeting those exceptions, including retaining and producing upon request an unredacted copy of the related member's tax return filed with the applicable taxing authority for each transaction, and providing an English translation converted to US dollars for any non-English tax returns.20 A taxpayer's eligibility for the exceptions to this addback under the tax law has been the source of audit activity and controversy. Taxpayers should closely consider the provisions in the final regulations when filing tax returns claiming such positions or in handling audit matters involving such assessments.
Part 4 — Apportionment
The final regulations provide additional rules for determining whether receipts from the sale of TPP are sourced to NYS. Statutory law provides that sales of TPP are assigned to New York if it's the final destination. Accordingly, the final regulations include rules to determine the "final destination" of TPP and include a presumption that the final destination is a point in NYS if TPP is transferred in NYS, unless sufficient evidence indicates otherwise.21 We have experienced substantial audit activity in this area and believe taxpayers need to closely review relevant provisions now that the regulations are final.
The final regulations greatly expand upon the apportionment receipts categories of "other services and other business activities"22 and "digital product and digital services."23 The tax law only includes hierarchical apportionment rules for each category, first looking at the customer's benefits-received location or primary-use location, respectively.24 The final regulations include numerous special rules for specific receipts falling within these apportionment categories25 and numerous examples26 illustrating the application of the specific and general rules to various fact patterns. In addition, the final regulations contain numerous examples and highlight that taxpayers generally need to engage in due diligence when addressing the initial and subsequent hierarchical apportionment sourcing methods of benefits-received location and primary-use location.27 The final regulations also provide reasonable approximation rules based upon the availability of customer information. The apportionment rules around these receipts categories were one of the first regulations the Department drafted, with numerous revisions throughout the years. In addition, certain of these apportionment receipts categories contain nuanced rules for passive investment customers, a business address presumption, intermediary transaction rules, and gain from intangible assets other than financial instruments, which are all discussed in turn next.
The final regulations provide a special rule for apportioning fees from management, administration and distribution services provided to investment funds and similar investment vehicles that meet the definition of "passive investment customer." Unlike the rule for apportioning fees from the performance of services to regulated investment companies (RICs),28 the statute lacked guidance for fees from services provided to non-RICs. The latter fees are apportioned under the "other services and other business activities" apportionment category. Under this category, taxpayers generally must apportion receipts to the location where the customer receives the benefit of those services.29
The final regulations provide some clarity around where the "benefit is received" for non-RICs, continuing to treat the investment vehicle as the customer but providing a look-through approach to determining where the benefit is received. Known as the "passive investment customer" (PIC) apportionment rule, it attributes fees from the relevant services to New York to the extent of the average value of interests owned by direct investors and indirect beneficial owners located in New York.30 If the taxpayer does not know the location of the underlying investor or beneficial owner, the benefit is presumed to be received where the PIC manages the contract for those services.31
Some uncertainties around the application of this rule remain, including the exact boundaries of the term "passive investment customer," the valuation of interests in a fund, and the treatment of fees from a fund that cannot identify the location of all investors and beneficial owners.
The Department rejected industry group calls to allow reasonable approximations when investor and beneficial owner locations are unknown, arguing "such a scheme would be too difficult to administer and potentially subject to manipulation."32 We have experienced substantial audit activity in this area and anticipate further controversy now that the regulations are finalized but lack necessary practical guidance for when investor and beneficial locations are unknown.
The final regulations provide a "business address presumption" for apportioning receipts from other services and other business activities and digital products/services. Previously known as the "billing address safe harbor," the Department included a provision presuming the location of a customer's primary use of a digital product/service, or the location where a customer receives the benefit of a service or other business activity, to be the customer's billing address if certain requirements are met.33 This provision was included following numerous comments from industry groups advocating for a way to ease the burden of the hierarchical apportionment methodologies required for the apportionment receipts categories. Taxpayers should be aware, however, that the "business address presumption" ultimately trumps the intermediary-transaction rule in some ways by requiring taxpayers use the billing address of the intermediary to source such receipts, not the billing address of the underlying consumer even if its transaction qualify as intermediary transactions. See the next section for a discussion on the intermediary-transaction rules.
For purposes of apportioning receipts from "other services and other business activities" and "digital products or services," the final regulations allow taxpayers to apportion these receipts using an intermediary-transaction rule. The intermediary-transaction rule essentially operates as a look-through sourcing provision that apportions receipts to an underlying consumer rather than the intermediary.34 Taxpayers should be aware of these look-through apportionment provisions, which did not exist in the statute. Whether a transaction meets the definition of an "intermediary transaction" has been the source of controversy. Even if a transaction meets the definition of "intermediary transaction," how to determine the location of the underlying consumer and whether reasonable approximations can be used to determine that location when the taxpayer lacks sufficient information have been the subjects of additional controversy. The business address presumption, discussed immediately above, can supersede the intermediary-transaction rule.
The final regulations include interest from reserves held at the FRB and income from investments in the FHLB in the "other financial instrument" apportionment category,35 which is generally apportioned to the location of the payor under NY Tax Law Section 210-A.5(a)(2)(H). The final regulations, however, deem a payor that " is part of a federal banking system that operates multiple banks throughout the United States" to be located in NYS "to the extent of the percentage of banks in [NYS]."36 The final regulations provide examples showing interest income from the FRB will be apportioned to New York at 1/12 and income from the FHLB to New York at 1/11 (based on the respective number of branches of such banks in NYS versus everywhere).
This provision has been the source of substantial controversy for NYS and non-NYS based financial institutions. Taxpayers should carefully consider the impact of this rule in filing returns, preparing financial statements and handling audits given the Department's clarification in the final regulations.
Unlike pre-2015 regulations and prior draft regulations, the final regulations lack exclusionary apportionment rules for business receipts from sales of real, personal, or intangible property that arise from unusual events. Taxpayers need to be aware that they must now apportion their receipts from most transactions recognized within the tax year. The absence of such rules can cause dramatic swings in apportionment year over year, particularly for companies selling a business or asset outside its normal trade or business.
We have experienced substantial audit activity in this area and suggest taxpayers seek alternative apportionment requests where necessary to properly reflect their business apportionment factor (BAF) in those tax years. Note that gains from the sale of stock and partnership interests are excluded from the BAF calculation unless those assets are considered qualified financial instruments and captured in the elective fixed-percentage method (under which 8% of net gains would be attributed to New York).
Consistent with recent case law, the final regulations do not consider a corporation to be a "registered broker or dealer" by reason of owning an interest in a partnership or LLC that is registered as a broker or dealer (whether it is a partnership or disregarded entity for tax purposes).37 Therefore, assuming the corporate owner does not itself qualify as a registered broker or dealer, receipts that are allocated to the corporate owner from such LLCs or partnerships will be the only receipts that are apportioned under the apportionment rules for registered broker-dealers under NY Tax Law Section 210-A.5(b).
The impact of these provisions is not as significant as in pre-reform years because NYS has now adopted market-based sourcing apportionment rules for all receipts. However, there are still some nuanced impacts; for example, the default apportionment rule is 8% when the customer mailing address cannot be identified for certain receipts.38
Taxpayers should also consider the Department's response to comments on the apportionment of brokerage commissions in the final regulations. Industry groups advocated for a regulatory alternative to NY Tax Law Section 210-A.5(b)(1), which apportions brokerage commissions based on "the mailing address in the records of the taxpayer of the customer who is responsible for paying such commissions … ." Industry groups argued, "if a corporation could demonstrate that the customer responsible for paying the fee is someone other than an investment advisor, the taxpayer should be able to use that party's address."
The advocated approach is consistent with recent case law in this area. The Department, however, argued that "the statute clearly provides different rules for registered broker-dealers that are consistent with the rules that existed pre-[tax reform]."39
NYS law defines a QFI as a financial instrument that:
A QFI also includes a financial instrument that is not itself MTM but is of the same type as a financial instrument described previously that has been MTM in the tax year.40
The final regulations contain provisions affecting the statutory definition. For example, in the case of a corporation that is a dealer in securities, a financial instrument will not be considered MTM for NYS purposes if (1) it is a security as defined in IRC Section 475(c)(2); and (2) it comes within one of the exceptions described in IRC Section 475(b)(1). This treatment applies whether or not the corporation identified the security under IRC Section 475(b)(2) and whether or not it is actually MTM for federal income tax purposes.41
The changes to the definition of MTM will not only impact whether an instrument is QFI eligible but will also require taxpayers to track instruments differently for federal and state purposes. Query whether any MTM net gains from securities recognized at the federal level will be similarly treated at the NYS level for apportionment purposes if the regulatory provisions apply.
The final regulations also impact the apportionment categories of "other financial instrument" and "stock and partnership interests" by requiring "sub-bucketing" for (1) determining the amount of net gains included in the apportionment receipts factor; and (2) determining QFI status for each sub-type.42 The regulations do not define each type of "other financial instrument," but indicate that foreign currency swaps are a different type of instrument than foreign government debt for netting and QFI determinations. The QFI-eligible categories that do not require sub-bucketing include loans, federal debt, asset-backed securities, corporate bonds, and commodities (except to the extent that loans secured by real property cannot be QFI and sales of commodities are broken down into sales with and without actual physical delivery).
We have experienced substantial audit activity in this area and believe there will be further controversy now that the regulations have been finalized. The Department has been examining the sub-bucketing issue for other financial instruments, MTM status and QFI determinations for each financial instrument category, and the proper status of loans, among other things. The Department has also been exploring whether different categories of financial instruments should be netted. Taxpayers need to consider how this provision impacts preparing returns, financial statements and audit matters.
For apportionment purposes, the final regulations do not include certain reimbursements not exceeding expenses and received by a taxpayer under a cost-sharing arrangement with another company in either NYS or everywhere receipts.43 If the cost-sharing arrangement marks up expenses, however, the mark-up is included in business receipts.44
In our experience, NYS and NYC have taken this audit position. Moreover, NYS's Assessment of Public Comment appears to indicate that a specific reference to federal definitions in this area need not be provided since NYS will generally follow federal definitions.45 We have seen audit activity in this area, especially as it relates to insurance companies and their corporate subsidiaries, as well as US corporations and their non-US affiliates.
The final regulations incorporate historic pre-corporate tax reform provisions disallowing changes to a taxpayer's BAF from federal audit adjustments if those changes occurred during the additional period of limitations in certain situations. Industry groups commented that this provision went against the Tax Appeals Tribunal decision in Matter of McDonnell Douglas,46 but the Department believes that "the proposed rule correctly interpreted the underlying statute."47
The final regulations require taxpayers to submit alternative apportionment requests before filing a return. Taxpayers may file amended returns to apply an alternative apportionment approach if the Department has not responded by the filing deadline. Taxpayers should consider alternative apportionment requests, especially if their BAF does not properly reflect their business income or capital in NYS. Taxpayers seeking alternative apportionment requests should be aware of the final regulations' requirement, however, to demonstrate that the "application of the statutory formula attributes income or capital to [NYS] out of all proportion to the business transacted by the taxpayer in [NYS]."48 The Department believes the "out of all proportion" language is consistent with the Tax Appeals Tribunal's interpretation of the statutory language.49
While taxpayers may request alternative apportionment, they should also be aware of situations when the Department or a court may do the same. In an example, the final regulations outline how gains from the sale of a partnership interest would be included in the business apportionment fraction if they constituted 75% of the taxpayer's business receipts for the tax year. Ordinarily, gains from those sales are excluded under NY Tax Law Section 210-A.5(a)(2)(G).
The final regulations add numerous special apportionment sourcing rules for sales of services and other business activities, including for the sales of intangible property, e.g., goodwill, copyrights, patents. Under this rule, the location where a customer benefits from such a sale is "presumed to be … the location where the value of the intangible was accumulated."50 Unlike prior versions of the draft apportionment regulations, the final regulations determine the location where the value of goodwill accumulates "using a three year average of the [BAF] … or other percentage … to apportion or allocate income to [NYS] of the entity that is sold, unless the facts and circumstances indicate another period of time is a better measure of where the value is accumulated."51 We have seen substantial audit activity in this area.
Part 6 — Reports
For a combined group to be eligible for the preferential tax treatment afforded QETCs under the final regulations, every member of the combined group must meet the requirements of a QETC.52 There has been controversy around whether a combined group can meet such qualifications under the statute if all members do not qualify. The final regulations, however, are consistent with recent litigation in this area.
The final regulations provide additional guidance around when taxpayers are engaged in a unitary business necessitating the filing of combined returns, as well as various unitary presumptions that do not exist in the statute.53 For example, newly acquired corporations are presumed unitary with the acquiring company "in the first taxable year that the corporations satisfy the capital stock requirement and starting in that year if the corporations are engaged in a relationship [that is vertically or horizontally integrated or there is strong centralized management]."54 We have seen substantial audit activity in this area and believe audits will continue now that the regulations are final.
Part 9 — Special entities
The final regulations retain the separate accounting election for certain "foreign" (i.e., out-of-state) corporate limited partners taxable solely because they hold a limited partnership interest. The election allows those corporations to take into account only their distributive shares of the limited partnerships' items of receipts, income, gain, etc.
Apparently, the election is not available to a corporate non-managing member of an LLC. The final regulations treat gain on the sale of those interests as taxable as business income, contrary to the prior regulations.
The final regulations lay out rules for determining if contracting companies and production companies meet the definition of "qualified manufacturers" and can be afforded preferential tax treatment.55 The Department believes this is a rational interpretation of the statute and limits potential abuse. We have experienced significant controversy in this area and have been informed of litigation.
The final regulations clarify that a non-captive REIT and a qualified REIT subsidiary must file a combined return.56 Practitioners believed the Department should reconsider this interpretation of the tax law, but the Department argued it is a correct interpretation. Under the final regulations, the capital base exemption applies to this combined return.
Issue of retroactivity
Given that the drafting process for these regulations has taken nearly a decade, taxpayers have consistently questioned whether the Department will or taxpayers may apply these regulations retroactively to tax years beginning before their publication date (December 27, 2023). The issue of retroactivity is impactful for financial reporting and ongoing audits, especially where the Department has changed its position over the long drafting process.
According to the Department, "[t]he [tax reform] legislation … specifically provided that the amendments contained therein generally apply to [tax] years beginning on or after January 1, 2015. The proposed rules interpret the statutory amendments of the [tax reform], and, therefore, will be applied to the same periods."57 Therefore, the final regulations apply retroactively to tax years beginning on or after January 1, 2015. The Department cited Matter of Varrington Corp. v. City of New York Department of Finance58 as support for its position that tax regulations can apply retroactively. Interestingly enough, the court in Varrington provided that "[r]etroactive tax legislation may be treated as valid, unless it reaches so far into the past or so unfairly as to constitute a deprivation of property without due process … [and] retroactivity of a tax statute, for a short period, is generally permitted … ."59 Query whether almost a decade of drafting regulations before finalization would be considered "reach[ing] so far into the past" or "a short period."
The Department stated, however, that it "may choose not to apply penalties in cases where taxpayers took a position in their tax filings prior to the adoption of the proposed rule in reliance upon prior article 9-A regulations or prior drafts of the proposed rule." Query whether penalties would be applied when taxpayers took positions based on the statute alone and disregarded provisions in the draft regulations because they lacked authority at the time; the Department included a disclaimer that the draft regulations "should not be relied upon" when released for comments.
Now that the NYS regulations are final, taxpayers should also consider their impact to tax positions taken in NYC for purposes of their business corporation tax under Subchapter 3A. During its October 31, 2023, conference for tax representatives and practitioners, the NYC Department of Finance indicated that it would begin drafting its regulations when NYS finalized its regulations. It also indicated it might deviate from various NYS regulatory provisions, including the apportionment of partnership receipts, the exclusion of an unusual-events rule, the sourcing of receipts from PICs, and the billing address safe harbor, which exists in the apportionment categories of "other services and other business activities" and "digital products and services."
NYS taxpayers in all industries should consider the NYS tax implications of the final regulations for various purposes including, but not limited to, tax compliance, audits (controversies), acquisitions and dispositions, reorganizations and planning.
1 P.L. 86-272 is a federal law that prohibits states from imposing state income tax on out-of-state sellers whose in-state activities do not exceed soliciting orders of tangible personal property.
2 20 NYCRR Section 1-2.10(a).
3 Assessment of Public Comment, Department, page 3.
4 20 NYCRR Section 1-2.3(b).
5 Id. at 1-2.3(b)(2)(i).
6 NY Tax Law Section 660(i).
7 In Matter of Lepage, N.Y. Tax App. Trib., No. 828035 (May 17, 2021).
8 NY Tax LawSection 208.5(a).
9 20 NYCRR Section 3-4.3(g).
10 20 NYCRR Section 3-4.2.
11 See, 20 NYCRR Section 3-6.1.
13 NY Tax Law Section 208.5(e).
14 20 NYCRR Section 3-8.12(a).
15 This is the available NYS NOL carryforward at the end of the base year, i.e., December 31, 2014. See, NY Tax Law Section 210.1(a)(viii)(B)(II).
16 Id. at (c).
17 20 NYCRR Section 3-5.1(a)(2)(i)(h).
18Assessment of Public Comment, Department, page 4.
19 NY Tax Law Section 208.9(o).
20 20 NYCRR Section 3-3.4.
21 NYCRR Section 4-2.1(a).
22 20 NYCRR Section 4-4.1.
23 20 NYCRR Section 4-3-1.
24 NY Tax Law Sections 210-A.10 and 210-A.4.
25 20 NYCRR Sections 4-4.3 and 4-3.3.
26 20 NYCRR Sections 4-4.11 and 4-3.11.
27 20 NYCRR Subpart 4-1.
28 NY Tax Law Section 210-A.5(d).
29 See, generally, NY Tax Law Section 210-A.10.
30 20 NYCRR Section 4-4.4(c)(2)(i).
31 Id. at 4-4.4(c)(2)(iii).
32 Assessment of Public Comment, Department, page 14.
33 See, generally, 20 NYCRR Section 4-3.2(d)(1)(ii) and 4-4.2(d)(1)(ii).
34 See, generally, 20 NYCRR Sections 4-3.8 and 4-4.8.
35 20 NYCRR Section 4-2.12(b)(4).
36 Id. at 4-2.12(c)(2).
37 20 NYCRR Section 4-1.1(e)(3).
38 NY Tax Law Section 210-A.5(b)(8).
39 See Assessment of Public Comment, Department, page 15.
40 NY Tax Law Section 210-A.5(a).
41 20 NYCRR Section 4-1.1(c).
42 Id. at 4-2.4(a)(2)(iii).
43 20 NYCRR Section 4-1.2(b)(6).
45 Assessment of Public Comment, Department, page 9.
46 N.Y. Div. Tax App., DTA No. 813275 (January 8, 1998).
47 Assessment of Public Comment, Department, page 10.
48 20 NYCRR Section 4-1.6(d).
49 The Department cited the Matter of Fairchild Industries, Inc., N.Y. Tax App. Trib., (March 9, 2000) in support.
50 20 NYCRR Section 4-4.3(e).
51 Id. at 4-4.3(e)(3).
52 20 NYCRR Section 6-2.1(e).
53 See 20 NYCRR Section 6-2.3(c).
54 Id. at (c)(5).
55 See 20 NYCRR Section 9-1.3.
56 20 NYCRR Section 6-2.6(a)(3).
57 Emphasis added. See Assessment of Public Comment, Department, page 20.
58 201 AD2d 282, aff'd 85 NY2d 28 (1995).
59 Id. at p. 33.